A comprehensive understanding of Bitcoin Layer2 opZKP: How to expand Bitcoin using ZKP?
Author: flowie, ChainCatcher
Editor: Marco, ChainCatcher
The continuous popularity of inscriptions is stimulating the rapid development of the Bitcoin Layer 2 space, with various solutions emerging like mushrooms after rain, aimed at expanding Bitcoin's functionality and enhancing its ecosystem. According to the latest statistics from the bitVM Chinese community, the Bitcoin network has birthed at least 34 Layer 2 solutions.
Behind the explosive growth of Bitcoin Layer 2 is the expectation of many entrants for its vast narrative space. Currently, Bitcoin's market capitalization is about three times that of Ethereum; can the market space for Bitcoin Layer 2 also reach three times or more than that of Ethereum Layer 2?
Despite the vast narrative space, Bitcoin Layer 2 is still in the early exploration stage. Compared to Ethereum Layer 2, which has basically formed a consensus on Rollup solutions, Bitcoin Layer 2 is exploring various technical routes, including native solutions like the Lightning Network and RGB, as well as adopting Rollup from Ethereum. Recently, solutions based on zero-knowledge proof (ZKP) technology, such as opZKP and ZKByte, have begun to emerge, aiming to further expand Bitcoin's Layer 2 capabilities.
Why does the Bitcoin ecosystem need ZKP more? How does ZKP expand Bitcoin? This article will analyze the implementation logic using opZKP as an example.
opZKP: Why Does Bitcoin Need ZKP More Than Ethereum?
With the explosion of inscriptions, the Bitcoin ecosystem is expected to achieve diverse financial play similar to that of the Ethereum ecosystem.
However, due to the fundamental design differences between Bitcoin and Ethereum, this goal is not easy to achieve. Bitcoin's script language is designed to be Turing incomplete for security reasons, thus lacking some key programming functionalities and unable to support the deployment of most smart contracts like Ethereum.
A significant challenge in the Bitcoin ecosystem is the limitation of its programming capabilities, especially in computation and verification. Currently, the UTXO unlocking conditions in Bitcoin's ScriptPubkey scripts serve as the core computational capability, with a streamlined model primarily used for simple transaction verification, thus limiting its ability to express complex business logic. Compared to Ethereum, Bitcoin network full nodes can only verify basic UTXO balances and script signatures, unable to handle more complex business logic verification. If making the Bitcoin network Turing complete poses significant risks, is there a possible solution to compensate for Bitcoin's lack of programming functionality?
In light of these limitations, the Lightec team proposed an innovative solution: upgrading Bitcoin using ZKP technology. This solution transfers complex computations that require Turing completeness off-chain and generates a concise proof through ZKP. Subsequently, by introducing new opcodes into Bitcoin's script language, it becomes possible to verify any off-chain executed computation proof on-chain. This strategy not only compensates for Bitcoin's Turing incompleteness but also makes it possible to deploy various applications on Bitcoin. In April 2023, the Lightec team proposed the opZKP opcode upgrade as a soft fork for Bitcoin to introduce this new opcode, aiming to expand Bitcoin's capabilities.
Once the opZKP opcode is activated, the Bitcoin network is expected to support a wider range of application deployments, greatly expanding its functionality and ecosystem, opening up new possibilities for the development of the Bitcoin ecosystem.
zkBTC: How to Decentralize "Bridge" Bitcoin to the Ethereum Ecosystem?
The maturity of Bitcoin Layer 2 technology and the emergence of various complex applications will require a longer time frame. The ZKP technology used by opZKP is relatively complex and may face a lengthy technical development cycle. How can liquidity be realized before the Bitcoin ecosystem is fully mature?
The zkBTC application built by the Lightec team provides a solution. zkBTC is a ZKP-based cross-chain bridge designed to help the Bitcoin ecosystem quickly "bridge" to the Ethereum ecosystem. Compared to centralized solutions like WBTC for cross-chain Bitcoin to Ethereum, zkBTC appears to be more decentralized. zkBTC offers a more secure and transparent method for asset transfer from Bitcoin to Ethereum.
It is reported that the zkBTC application will launch $zkBTC, an ERC-20 token pegged 1:1 to $BTC. Users can deposit a specific amount of $BTC into a designated Bitcoin address to mint $zkBTC, with the entire process generating a ZKP proof of the deposit off-chain; then this proof is verified on the Ethereum smart contract. Once the transaction is confirmed to have occurred, the contract will mint the corresponding amount of $zkBTC tokens for the user, allowing them to use it within the Ethereum ecosystem. Furthermore, throughout this process, the Lightec team does not control the private key of the designated Bitcoin address. In fact, once the opZKP opcode is activated, the designated address can be controlled by one or more private keys, ensuring the security and decentralization of the entire process.
When users redeem assets from Ethereum back to Bitcoin, they must call an Ethereum smart contract to burn a certain amount of $zkBTC tokens and generate a proof off-chain. Once this proof is verified, users will receive the corresponding amount of Bitcoin. As mentioned earlier, due to Bitcoin's inherent Turing incompleteness limiting its complex verification capabilities, if the new opZKP opcode is activated, it can achieve a simplified verification process similar to Ethereum, ensuring the authenticity of transactions and forming a cross-chain closed loop. Before the activation of the opZKP opcode, as a transitional technical solution, the ZKP proof of transactions will be verified through a smart contract deployed in a tamper-proof container, and this process will only authorize certain UTXOs for final payment after verification. Additionally, this tamper-proof verification container can ensure the security of the signing private keys, preventing anyone (including the Lightec team or container operators) from accessing this critical information.
Currently, the Lightec team is actively developing the zkBTC project and expects to launch a testnet in a few months. At the same time, the team is preliminarily constructing a token economic model aimed at creating substantial returns for investors and early users, rewarding users and the community while supporting the further development of the opZKP proposal, jointly advancing the construction of the Bitcoin Layer 2 ecosystem.